Another attack on the low-paid the last thing the Coalition needs

The call for the removal of penalty rates is the wrong fight at the wrong time for the government, which is why it was shut down quick smart yesterday.

The speed with which Employment Minister Eric Abetz shut down another outbreak of speculation on dumping penalty rates yesterday reflects the extent to which, however much it may deny it, the budget has made the government worry a lot more about perceptions of fairness.

The penalty rates issue periodically erupts into public debate when business decides to make a concerted push, or lazy journalists go looking for a story about why their favourite coffee shop isn’t open on a Sunday, or both. In March, regional Coalition backbenchers tried to revive the issue. On Monday, it was Jamie Briggs, whom business has looked to for leadership on the issue given his role in crafting WorkChoices for the Howard government.

Briggs continued two of the characteristics of the debate — attempting to cast it about some more ethereal matter than simply cutting wages, and relying on anecdotes rather than facts. “We do not think that workplace relations should be seen through the prism of us versus them,” Briggs said, although the workers whose income he wants to cut could be forgiven for thinking it was very much about “us versus them”. That approach echoed that of rural Liberal Dan Tehan, who in March called for the issue to be taken out of the “trench warfare” of politics. What that precisely means isn’t clear, but one interpretation is that workers, unions and Labor should simply abandon self-interest or their job of defending workers and accept income cuts.

Like the backbenchers, Briggs also took the “data is the plural of anecdotes” approach, saying “[w]e cannot accept that on New Year’s Eve you can’t attend your ­favourite restaurant because it is impossible for that restaurant to pay its staff to open up”. Where this beleaguered restaurant was wasn’t reported.

“The claims that penalty rates in the hospitality sector are hurting employment didn’t stand up in March and don’t stand up much better now.”

Briggs also implored business to make the case for reform — a line that we hear often from the Coalition both in opposition and in government. It was only last week that Treasurer Joe Hockey was lamenting that business had let him down in failing to help sell the budget. At some point the penny might drop within the Coalition that it’s the job of politicians, not of business, to lead public debate and the reform process, and that Australian business never led any debate successfully because it isn’t trusted by the community to do anything other than represent its own interests. Indeed, the thought might occur to the Coalition brains trust that when you have a mentality of wanting others to make the positive case for reform for you, that further atrophies your own skills at selling reform, something that so far the government has been abysmal at.

But we digress.

Alas, the claims that penalty rates in the hospitality sector are hurting employment didn’t stand up in March and don’t stand up much better now. According to Australian Bureau of Statistics data, in the March quarter part-time employment in the relevant sector, food and beverage services, had risen to 409,000, the second-highest on record. Total employment had risen to 672,000, the third-highest on record (in both cases, the highest employment was in the same period in 2013). How well employment holds up into the June quarter, when retailing took a hard hit from the government’s budget, remains to be seen. What we do know is that in 2013, when there was a slowdown in economic growth, there was a small fall in the total number of food and beverage services outlets, even if that didn’t seem to affect employment growth.

More senior figures in the Coalition understand that penalty rates is not some nebulous issue that should be above partisan debate, but go directly to workers’ incomes — specifically, the incomes of some of the country’s lowest-paid workers. Employees in the broader industry sector, accommodation and food services, have the lowest average weekly total cash earnings in the economy, and rely heavily on penalty rates for additional income. Cutting penalty rates would target the poorest-paid workers in the country. For a government that faces not being able to pass the guts of its budget because of well-founded perceptions it is unfair, opening yet another front in the war against low-income earners at this point would have been the worst possible option.

“The claim today that the Government has any plans to change the way penalty rates are determined is false.

“There will be no change to the way penalty rates are set.

“The role of determining minimum wages and conditions, including penalty rates, will remain with the Fair Work Commission.”

Bang.

The Coalition may indeed want to cut penalty rates, but right now is the worst possible time to do it. The political timing isn’t the only problem. Cutting wages in one of the larger subsectors of the economy (7% of all workers are in accommodation and food services), particularly wages of low-income earners, who spend far more of their discretionary income than higher-income earners, will curb demand in the rest of the economy — most immediately in retail, the very sector demanding the cuts — at a point when there are deepening concerns about unemployment. Indeed, rising unemployment and falling wages might snowball into a bigger impact on consumer sentiment even for people securely employed in higher-income sectors.

Abetz presumably remembers St Augustine’s cry of “Lord make me pure, but not yet.” The “yet” might be a long while for those who want to dump penalty rates.

particularly wages of low-income earners, who spend far more of their discretionary income than higher-income earners, Exactly, which is really one good reason, amongst other reasons, the low-income earners should pay a lower tax?

One other thing about those working for 3/5th of nowt in the accommodation and food services sector is that many are students. Combine an attack on penalty rates with the significant rises in uni fees on the back of HoJo’s budget (assuming they get it through) and watch admissions plummet and homelessness and suicide skyrocket.

Alas for the Conservative “Age of Entitlement”?
The Limited News Party can’t rely on Murdoch as much as they’re used, to carry the PR day.
When it comes to positive PR/policy sell, it’s getting harder for his Limited News to do all that “heavy lifting” (that they used to be able to do when they Con-trolled most of what we got to read) - they’re competing with niche/social media now?

Anyway, why should the hoi polloi be able to celebrate an event like New Year’s eve, like “the more deserving”? Someone has to wait on them!

Always a worry when Tories come up with dross like ‘them and us’. It is code for giving employers a free pass while further devaluing the input of labour. Otherwise the argument could equally be used for raising penalty rates and we know that is not Briggs’ or Tehan’s ultimate goal.

The one thing that can be controlled and is manageable for retailers and restaurateurs is staffing. The two things that are extraordinarily costly and can run wildly out of control are Landlords and Franchises. Why must we have to continually listen to disproportionate claims about staffing costs when some of the main killers of small business are rent and loan repayments.

“[w]e cannot accept that on New Year’s Eve you can’t attend your ­favourite restaurant because it is impossible for that restaurant to pay its staff to open up””

Robert Brown beat me to it. Yes, unless New Year’s Eve falls on a Saturday or a Sunday, then they won’t pay any penalty rates, or at least only the rates applicable to an afternoon shift or an evening shift (usually around 12.5% - 15%)

From what I hear, most Saturdays and Sundays fall on Saturdays and Sundays. That’s a problem that the restaurants and retailers seem to manage around.

The government is crazy to fight to change the penalty rates regime. All they need to do is to deem that from now on Saturdays will be known as ‘Gerbils’, thus attracting no penalty rates, and that Sunday will be henceforth known as ‘FrogsHollow’, thus attracting no penalty rates.

I am ashamed to say I live in the electorate of Mayo, ‘represented’ by one Jamie Briggs! I hasten to say, he does NOT represent me!!
Good article, Bernard. You might be interested to know that Senator Bob Day, that well known Christian from Family First here, was on local radio this morning with his proposal to allow workers, particularly the young, to ‘opt out’ of the conditions set by Fair Work Australia. They could then offer to work for $15/hour or less, and without penalty rates! These job seekers could then ‘negotiate’ to have sick leave cover, but no holiday pay etc. etc.
According to Day, he wants the government to vote for his private member’s bill (introducing the above) before he will agree to pass some of the budget issues.
Work Choices, anyone?

High income earners don’t WANT to cut the incomes of the lowly paid. This is simply a side-effect of the sacrifice that must be made for the good of all society.

In order to prove this isn’t simply a cynical attempt at screwing the poor to benefit the rich, the BCA have passionately argued that any drop in penalty rates or the minimum wage should be offset by an increase in the tax-free threshhold to ensure low income workers don’t end up worse off overall. This in turn will be funded by a small increase in the top tax rate, so that the sacrifice will truly be shared across all of society.

I heard Senator Bob Day prattle on about his great idea to eliminate unemployment by allowing prospective employees to negotiate the terms of their employment outside of the award scheme. Sadly this man represents us in Parliament; sad because clearly he has no understanding of work practises or economics or social morality, the whole trifecta!!
Across most sectors of employment pay is around 10-15% of total costs. and has little impact on the numbers employed in the sense that most organisations will operatewith minimum necessary to do whatever they have to do, very rarely are there surplus staff and lowering wages would not mean that more were hired.

So if Bob Day asked HR experts or the like he would find that in virtually every sector reducing wages does not increase the potential to hire more people. It certainly can increase profits, but only in very small enterprises as market forces drive wages and to get the right guys you pay the right dollars.

Senator Bob Day might want to set an example by insisting his senator salary be reduced to $75,000 per year. After-all everyone would agree; people with half a brain should be honest and demand half their entitlements. He may want to donate the other half of his income to some Christian charity looking after the unemployed or homeless.

The LNP have just gone back to the bunker for this one, had the budget got through then the next target would have been Work Choices Mk2, don’t kid yourself it wouldn’t have been. How many of the current government came out critical about the latest revelations on the exploitation of youth as interns? This government is just plain evil in so many forms.

I suspect Erica’s statement that “There will be no change to the way penalty rates are set” belongs in the same bin as “no new taxes under a government I lead”, “no cuts to the budget for health care” and “You can vote Liberal or Labor and you’ll get exactly the same amount of funding for your school”.

The only possible justification for a reduction in penalty rates is to increase the number of people with jobs which is a technical approach to economic management. The class warfare idea that it’s kicking the low paid when they’re down plays well in the socialist collective but is not really what the idea is about.

But the unions have won this one. The “Boo! Workchoices!” slogan works well to make any reform in industrial relations impossible. The intro to this story even uses it.

David Hand-I thought penalty rates were neotiated by unions to recompense workers (not management) for having to work unsociable hours such as weekends and shifts outside the normal 9-5.
As the head of the ACTU said recently, when they hold the AFL grand final on a Tuesday then I will know that there are no weekends.
My daughter recently started working as a registered Nurse and has commented how having to work odd shifts destroys her outside life as her friends work or study during normal hours or weekdays, not weekends. Panlaty rates are placed to recompense workers for losing their normal life.
Getting rid of penalty rates to put more people in jobs is bunkum, along the same far right agenda of getting rid of the mimumum wage. Next they will be telling us they should get workers on consignment who work for tips, or is that what some employers are using Internships for?
If this is sopcialist collective speak, sign me up!

BK - Briggs also took the “data is the plural of anecdotes” approach perfect capture of the MO of this pack of vicious morons.
As usual, the Menzies House stenographer OneHand (must be difficult, as Peter Cook opined, being ‘monomano’)provides the gallows humour with his “reality is a kommie konspiracy” black-is-a-dirty-shade-of-white troothniess about lower wages=higher employment.

Wages are a significantly greater percentage of operating costs than 10-15%. That level may be true in manufacturing and capital intensive businesses such as mining but the service sector, where most jobs have gone, it is well over 50%.

In the café scene, rent and interest are fixed overheads that have to be paid whether they open or not. So opening Sundays adds nothing to those costs but enables the café to generate more business to amortise the overheads. Besides this it’s a day when many people are interested in eating out if facilities were open.

But labour is a variable cost. Because the ACTU has discovered a newfound desire to encourage it’s members to go to church, cafes face a blow out in costs for Sundays that makes it uneconomic to open.

So we have a day where we would like to eat out, there are willing workers who would work on such days, there are businesses that would like to open on those days but Fair Work Australia has decided to encourage us to go to church instead. Senator Day should be pleased!

Meanwhile, we are doomed into eating in pubs and clubs on Sundays where pokie profits cross subsidise the penalty payments enjoyed by the workforce.

People want work but can’t get it. We are talking about penalty rates that are not paid because venues are not open. We are talking about small businesses that are marginal at the best of times watching the trade that could make a difference going past their doors to the Pokie fuelled RSL.

This is why the union movement has such a poor outlook. It is fighting against small business owners who are struggling. We are becoming a nation of SMEs and the ACTU is becoming more and more concentrated in government organisations where the downtrodden taxpayer can just be expected to front the cash for workers’ lifestyle choices.

The ACTU will fight to the end against paid parental leave and 80% of them will continue to enjoy what they have stopped others getting. The ACTU doesn’t give a stuff about the low paid.

But labour is a variable cost. Because the ACTU has discovered a newfound desire to encourage it’s members to go to church, cafes face a blow out in costs for Sundays that makes it uneconomic to open.

There is, of course, an obvious solution to this problem, and that is to charge higher prices on Sundays to cover the higher labour costs and make it economic.

Had the returns to capital over the last few decades not been going through the roof while the returns to labour dropped, their cries of “poor us” might find some more receptive ears. But we all know it’s just another example of the greedy “more is never enough” attitude.

Doctor,
That’s an obvious solution thought up by someone with no idea how to run a business.

In my inner Sydney suburb, 1 in 8 cafes are open on a Sunday and those are the struggling ones who will probably not survive the year.

Café owners are proving your obvious solution wrong by not opening. Ant I’ll tell you something else. Café owners are not greedy cigar smoking fat cats. Most of them are small operators starved of cash, busily blowing their scarce capital on dubious ventures. Helped along by the ATCU of course.

Doctor,
Monopolies succeed in charging more for services outside normal hours. Market forces stop those in competitive environments from charging more. Such as the café scene. Some may put a surcharge on for public holidays but the vast majority just don’t open unless they are in high traffic touristy areas. Tradies may charge more to incentivise customers away from after hours call outs.

Yes, I think most café owners are not great business people. They have a passion for food and customer service. But the sheer turnover of businesses opening and then closing shows this to be true.

Your last point is an absolute joke. It is government laws to favour the ACTU that is oppressing them. These marginal businesses are being driven under by Union friendly regulations set up by their mates in FWA who think everyone should go to church.

The unions needed some sort of argument to support their contention that Sunday is “special” and deserving of penalty rates. My linking them to church attendance is simply a smart-arsed way of pointing it out.